When is a Promesse (de Vente) Not a Promise?
Tuesday 17 February 2009
There are two forms of French property sale contract, but one that has always had a little less certainty than the other.
In strict legal terms, only the compromis de vente imposes a bilateral obligation on buyer and seller.
Under this type of contract the owner agrees to sell to the purchaser, and the purchaser, in turn, agrees to buy from the owner, subject to any conditions that may be stipulated in the contract.
Both parties to a compromis de vente can enforce execution of the contract.
By contrast, the promesse de vente grants the buyer an option to buy the property within a certain period, although if they withdraw from the contract, they lose the deposit they will have paid.
In the past, the French courts have also determined that if the seller decided to withdraw the option to buy granted to the buyer, they would similarly not be obliged to proceed with the sale, although they would be liable to pay damages.
As a result, most notaires have adopted use of the compromis de vente, or they have inserted clauses in the promesse de vente to provide additional security to the buyer so that the sale could be enforced. However, this is not a rule that is universally applied.
In a recent decision that will be greatly welcomed by buyers, the French Cour de Cassation (the highest court in the land) recently confirmed that where a promesse de vente specifically provides for enforcement of the sale, then no right of retraction can apply to the seller.
The case concerned the sale of a commercial premises in Paris from one company to another, in which a promesse de vente was used, but the ruling is equally applicable for residential sales.
In the case, the seller decided they no longer wished to sell to the buyer, who then brought a legal action for execution of the contract.
The request of the buyer was rejected by the French Court of Appeal, who stated that the only remedy was damages.
The case went to the Cour de Cassation who confirmed the decision that the execution of contract could not be enforced.
The court reasoned that, in this particular case, no clause concerning forced execution of the contract had been included, so they fell back on the traditional remedy in French law of payment of damages for breach of contract.
In making their decision the court did make clear that had such a forced execution clause been included in the promesse, then this remedy would have been permitted.
In practice, most notaires use the compromis de vente, although the promesse is used more widely in the Paris region. If it is used in your case, make sure that it contains the forced execution clause.
You can read more about French property sale and purchase contracts in our guide to Buying Property in France.